AI Drafter 
TaxTMI 
TaxTMI 
2012 (12) TMI 1135
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....business of money lending in the name of M/s. Rajnikant & Brothers. The assessee was also running another proprietorship concern in the name of M/s. Yashodhara Jewellers, engaged in silver and gold ornaments business. The AO on examination of books of account found number of cash credits appearing in the books of account from 20 persons. The details of the same are noted at page 1 & 2 of the assessment order with amounts advanced by them. In respect of these cash credits, confirmatory letters were filed. The confirmatory letters were in the names of individuals, but those confirmatory letters were not having any proof with regard to identification of these creditors. All the transactions are in cash. The genuineness of the transaction could....
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....l as failed to establish their creditworthiness. The appeal was accordingly dismissed. 3. The ld. Counsel for the assessee reiterated the submissions made before the authorities below and submitted that the assessee is in business of silver ornaments and those 20 creditors have given advance for purchasing the silver ornaments as per suitable rates. The assessee filed confirmation letters and all the transactions were routed in cash. The books of account have been accepted by the AO. Therefore, on filing the confirmation and capital account of the creditors, onus upon the assessee u/s. 68 is discharged. He has admitted that the provisions of section 68 are applicable in the case. He has also admitted that rate of silver ornaments as per ....
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....for the assessee thus admitted that the provisions of section 68 of the IT Act are applicable in the case of the assessee. For proving the ingredients of section 68 of the IT Act, the burden is upon the assessee to prove the identity of the creditors, their creditworthiness and genuineness of the transaction. However, the assessee has not proved any of the above conditions u/s. 68 of the IT Act. The assessee filed mere confirmation letters from the creditors without filing supporting evidence to prove the identity of the creditors, their creditworthiness and genuineness of the transaction. The AO vide order sheet dated 13.09.2009 on filing the confirmations by the assessee gave show cause notice to the assessee as to why the addition u/s. 6....
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....rces was not perverse or unreasonable." 4.1 The Hon'ble Calcutta High Court in the case of CIT Vs United Commercial and Industrial Co. (P) Ltd., 187 ITR 596 held as under: "The primary onus lies on the assessee to prove the nature and source of credits in its account. It is necessary for the assessee to prove prima facie the identity of his creditors, the capacity of such creditors to advance the money and lastly the genuineness of the transactions. Only when these things are proved by the assessee prima facie and only after the assessee has adduced evidence to establish the aforesaid facts does the onus shift on to the Department. It is not enough to establish the identity of the creditors. Mere production of the confirmation l....
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....assessee has not mentioned anything if the assessee has purchased any silver on receiving the advance from these creditors. The ld. Counsel for the assessee also admitted during the course of arguments that as per market practice, rates of silver/silver ornaments have to be taken of the date when advance has been given. Therefore, there was no question of withdrawing from the transaction on increase of the value of silver. Therefore, there is serious doubt about the confirmation filed by the alleged creditors. In such a situation, it is the duty of the assessee to establish the identity of these creditors and their creditworthiness through documentary evidence in order to prove genuine transaction in the matter. But the assessee failed to d....
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....fficer in an appropriate case in taxing both the cash credit, the nature and source of which is not satisfactorily explained, and the business income estimated by him under section 13 of the Indian Income-tax Act, 1922, after rejecting the books of account of the assessee as unreliable." Therefore, the contention of the ld. Counsel for the assessee is rejected. Considering the above discussion, it is clear that it is a case of no evidence filed by the assessee to prove the identity of the creditors, their creditworthiness and genuineness of the transaction. Therefore, none of the decisions cited by the ld. Counsel for the assessee are applicable to the facts of the present case. The ld. Counsel for the assessee was also requested to cite....